In the face of a deepening recession and ongoing credit crunch, businesses continue to worry about paying for products and services and wonder about the financial health of their suppliers, vendors and customers.

“Everyone is very conscious of receivables,” says Ken Patton, president of Mercer Capital, Inc., a business valuation firm based in Memphis. “People are paying a lot more attention to it.”

Receivables, money owed to a business for its products or services, is just one more domino in the economic and business cycle that’s teetering.

It’s one of the key functions of the business cycle that’s critical to the system working well, Patton says.

In good times, confidence in the economy translates to confidence in the system. In a rough economic time, the reverse is true.

Here’s how it’s supposed to work: A company provides raw materials to a manufacturer with the understanding that in 30 or 60 days, once the product is made and sold, it will get reimbursed.

Now, says Patton, companies are asking a lot of questions of any potential supplier or client to determine their financial health and ability to pay.

“You don’t want to let clients get overextended,” he says.

Thomas Feeney, chief financial officer for Memphis-based manufacturer Bryce Corp., says the biggest protection against getting in trouble with an overextended customer is communication. Feeney spends a lot of time talking to suppliers and customers, making sure he knows their financial situations, challenges and, for example, their own systems for addressing receivables.

“Make sure you know people,” he advises. “We’re very cautious on both sides of the balance sheet.”

The broader impact is that as a precaution, companies are tightening their payment standards, eliminating credit for some and taking quicker action when bills go past due, says David Mendelson with The Mendelson Law Firm, a collections and bankruptcy practice.

Today, he advises clients at day 30 to look at receivables to review past-due obligations. A year ago he would have advised such caution at 45 days.

Before day 60 a collection letter should have already been sent and by day 60 consideration should be given to turning the debt over to a collection agency. At 90 days past due there could be trouble brewing. A business that is owed money needs to be aware of a potential bankruptcy by the customer and how to proceed.

“If you’re not the first person to the door you may not get paid,” he says.

Concerns about getting paid extends even to professional service firms like accountants, lawyers, doctors and mental health professionals.

Jon Poulin, a partner at Cannon Wright Blount PLLC, says the firm has begun sending invoices every day — not just once a week.

And with the April 15 tax deadline nearing, the firm for the first time is calling clients with past due bills with a clear message: Cannon Wright won’t work on this year’s tax preparation until last year’s is paid.

“You used to trust clients, but with everyone’s business tightening up you have to watch credit a lot more,” he says.

For manufacturers like Bryce, operating on receivables is simply the way the business has to function, making credit more crucial, says Melody Vollman, senior vice president for Southeastern Commercial Finance LLC, a private working capital finance company.

The company finances accounts receivable so a business doesn’t have all its cash tied up in assets waiting to convert to cash. The firm will do $250,000 in funded debt and will go to $2 million-$5 million with lender participation. Most are under $2 million.

“That way companies can tap into cash that they have tied into receivables at the time,” she says.

Southeastern’s business picked up last year as banks began tightening lending standards and oversight of credit limits.

More companies have turned to firms like Southeastern to access cash to keep obligations to vendors within their requirements.

“Vendors are nervous,” she says.

And when they’re nervous it shows in how they treat receivables. Right now, companies are laser focused on their debt and the debt of customers.

“We’re seeing a lot of companies really shoring up their credit function,” she says.